Albertsons chooses Azure as retailers steer around Amazon's services

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Dive Brief:

Supermarket chain Albertsons signed a three-year cloud deal with Microsoft, making Azure its preferred public cloud, Anuj Dhanda, CIO of Albertsons, said during an interview with CNBC.

Albertsons employees are signing up with the Microsoft 365 bundle in conjunction with using Azure. Additionally, the grocer wants to leverage Microsoft's artificial intelligence tools to co-create cashierless systems, according to the report.

Amazon's competitive growth has helped accelerate Albertsons' modernization efforts, according to Dhanda. "We wouldn't want to develop the technology as much as Amazon would do, but we would say, 'How do we deploy the technology, how do we leverage it?' "

Dive Insight:

Microsoft continues to scoop up grocery cloud customers following Amazon's Whole Foods acquisition in 2017. Mindful of not wanting to put their data — not to mention their money — in the hands of an e-commerce behemoth that's now a major competitor, Kroger, Walmart and online grocers like FreshDirect have adopted Azure for their cloud services.

Kroger and Microsoft have also partnered on a number of initiatives powered by Azure, including a collaboration on a commercialized retail as a service product open to the rest of the industry after initial piloting done at Kroger. The companies' digital shelves offer personalized promotions and dynamic pricing, while a new "guide to shop" feature lights up items that appear on shoppers' grocery lists.

As Microsoft continues to shape its offerings to accommodate specific industries like grocery and retail, the other two leading cloud providers, Amazon and Google, have a battle of perception to overcome. Both companies have growing presences outside their cloud businesses. Though their growth strategies are impressive, the companies are unintentionally scaring off potential customers.

Amazon's retail business and Google's advertising business are working against the two companies' cloud businesses, said Alysa Taylor, Microsoft corporate VP of Business Applications and Industry, in an interview with CIO Dive earlier this month. Alternatively, Microsoft doesn't have that perceived conflict of interest as its primary identifier is just "tech company."

Before Albertsons confirmed its partnership with Microsoft, the grocer reported strong Q3 2018 revenue growth, which CEO Jim Donald credits to an improving omnichannel experience. In October, Albertsons deployed its online marketplace with eyes set on selling about 100,000 products. The company also announced a pilot program for robots to fill shopping carts instead of employees for online orders.